Westports IPO Target Price

As I have mentioned in my previous post, analysts will come out with different methods in giving Westsports fair value, rather than the common PE ratio. This is because Westsports based on IPO price of RM2.50, Westports PE ratio is high. Westports fair value is RM2.84 by Alliance Research. They say based on Westports policy to payout 75% of net profit as dividend, they expect Westports’ FY13-FY15 DPS of 9.0 sen, 9.8 sen and 9.9 sen respectively. Based on the Westports IPO retail price, this translates into to a dividend yield of 3.6%, 3.9% and 4.0%, for FY13 to FY15, respectively. They derive a fair value of RM2.84, using dividend discount model. This implies an upside potential of 13.6% to the retail IPO price of RM2.50.Their fair value of RM2.84 translates into FY14 P/E of 21.7x and FY14 dividend yield of 3.5%, which is in line with Westports’ peers.

One thing is the IPO price is not fixed yet, and have chances of a lower IPO price depending on the bidding by institutional clients.

JF Apex Securities said subscribe with a target price of RM2.97. Their non-rated target price is based on Dividend Discount Model (DDM) with discount rate, WACC of 7.2% and terminal growth rate of 2.5%. It translates into implied PER of 19.4x for 2014F which is above its peers’ average of 16.5x. They view the higher PER is fair given the Group’s status as a leading port operator in Malaysia shall render premium valuation to the Group.

Their target price translates into potential upside of 22.8% (capital appreciation of 18.8% and dividend yield of 4%) to the listing price. They believe the Group’s dominant position as a leading port operator in Malaysia with commendable earnings track record and decent dividend yield would attract investors’ interest.


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According to HWANGDBS Vickers Research, recommendation subscribe: Fair value of RM2.75. The Westports fair value is based on DDM valuation (assuming sustainable dividend payout ratio
of 75%, initial 5-year growth rate of 8.2%, 6.6% discount rate, long-term growth rate of 5.5% and a concession period until 2054). This translates into potential total return of 13% (inclusive of dividend yield). Thier target price – which values Westports’ market cap at RM9,378m – implies FY13 net dividend yield of 3.0% and 19.8x FY14 P/E. We value Westports at a premium to NCB Holdings (15.2x FY14 P/E; market cap of RM1,872m), which operates out of Northport (with a handling capacity of 5.5m TEUs per annum) in Port Klang, because of Westports larger market cap and strong earnings track record.


Source:  ht**://politemarket.blogspot.com/2013/09/westports-ipo-target-price.html

Malaysia's Westports prices share-sale at top end

KUALA LUMPUR: Westports Holdings Bhd, the operator of Malaysia's busiest port, has raised about 2.03 billion ringgit ($628.77 million)in its IPO, pricing it at the top of expectations, two sources with direct knowledge of the deal said on Monday.

The IPO for Westports is likely to be the country's second largest this year behind UMW Oil & Gas Corporation Bhd, an offshore and drilling services firm, which is looking to raise $740 million.

Westports, which is partially owned by Hong Kong billionaire Li Ka-shing, priced the offering at 2.50 ringgit per share versus an indicative price range of 2.30-2.50 ringgit said the sources, who were not authorised to speak publicly on the matter.

All proceeds from the offering will go to existing shareholders and not to the company which has said it is listing to raise awareness of its brand.

The company leaned heavily on cornerstone investors, ranging from Utilico Emerging Markets to Genesis Investment Management, who accounted for close to 48 percent of the total institutional tranche.

Westports, which counts state investor Khazanah Nasional Bhd and Li's Hutchison Port Holdings as shareholders, could not be reached for comment.

Credit Suisse, Goldman Sachs and Maybank were joint global co-ordinators. Bank of America Merrill Lynch, Credit Suisse, Goldman Sachs, HSBC and RHB are joint bookrunners.

The offering accounts for 23.8 percent of its total share base. ($1 = 3.2285 Malaysian ringgits) - Reuters